,Table of Contents
1. Taxation: The big picture ................................................................................... 8
1.1 Background to Taxation .............................................................................................. 8
1.2 Section summaries and areas of focus ......................................................................... 8
1.2.1 Discussion questions ................................................................................................. 8
1.2.2 Calculation questions ................................................................................................ 9
2. Writing the exam ............................................................................................... 9
2.1 Examination technique and style of testing ................................................................. 9
2.2 How to use the legislation handbook in Taxation ...................................................... 10
3. Study day programme and suggested approach ............................................... 10
4. Examinable Pronouncements: ITC 2020 ............................................................ 12
Course Notes ....................................................................................................... 33
1. Gross income, exempt income and income ...................................................... 33
1.1 Introduction ............................................................................................................. 33
1.2 Case law ................................................................................................................... 33
1.2 Residence and source ............................................................................................... 34
1.2.1 Residents ................................................................................................................. 34
1.2.2 Source ..................................................................................................................... 34
1.2.3 Possible relief from double taxation ....................................................................... 35
1.4 Amount, in cash or otherwise ................................................................................... 36
1.5 Received .................................................................................................................. 36
1.5.1 Possible relief in respect of amounts received in advance ..................................... 37
1.6 Accrued .................................................................................................................... 37
1.6.1 Possible relief in respect of amounts accruing in advance of receipt .................... 37
1.7 Excluding receipts or accruals of a capital nature ....................................................... 38
1.8 But including… the special inclusions ........................................................................ 39
1.9 Exempt income and income ...................................................................................... 39
2. General deduction and specific deductions ...................................................... 40
2.1 Introduction ............................................................................................................. 40
2.2 The trade requirement ............................................................................................. 40
2.3 In the production of the income ................................................................................ 41
2.4 Expenditure and loss ................................................................................................ 41
2.5 Actually incurred ...................................................................................................... 41
,3.11 Trading stock – final notes ...................................................................................... 47
4. Capital allowances, recoupments and disposal allowances ............................... 47
4.1 Overview ................................................................................................................. 47
4.2 Recoupments and disposal allowances ..................................................................... 47
4.3 Disposal allowances – section 11(o) .......................................................................... 48
4.4 Recoupments – section 8(4) ...................................................................................... 48
4.5 Proceeds on disposal not accrued or not determinable – sections 24M and 20B ......... 49
4.6 The specific capital allowances ................................................................................. 50
4.6.1 Section 11(e) – movable assets ............................................................................... 50
4.6.2 Section 12C – plant and machinery ........................................................................ 50
4.6.3 Section 12E – small business assets ........................................................................ 51
4.6.4 Section 12N – government land and buildings ....................................................... 51
4.6.5 Section 13 – industrial buildings ............................................................................. 52
4.6.6 Section 13quin – commercial buildings .................................................................. 52
4.6.7 Section 13sex – residential units ............................................................................. 53
4.7 General .................................................................................................................... 53
4.8 Repairs – section 11(d) ............................................................................................. 53
5. Capital gains tax .............................................................................................. 54
5.1 Introduction ............................................................................................................. 54
5.2 The inclusion of capital gains .................................................................................... 54
5.3 Asset ........................................................................................................................ 54
5.4 Disposal ................................................................................................................... 55
5.5 Proceeds .................................................................................................................. 55
5.6 Base cost .................................................................................................................. 56
5.7 Primary residence..................................................................................................... 57
5.8 Assets acquired before 1 October 2001 ..................................................................... 58
5.9 Proceeds exceed expenditure or expenditure cannot be determined ......................... 58
5.10 Proceeds do not exceed expenditure....................................................................... 59
5.11 CGT and foreign currency ........................................................................................ 61
5.12 Roll-over relief – Part IX .......................................................................................... 61
5.13 Attribution of capital gains – Part X ......................................................................... 62
5.14 Withholding tax on sale of immovable property by non-residents ............................ 63
6. Value-added tax .............................................................................................. 63
6.1 VAT payable ............................................................................................................. 63
6.2 VAT imposition ......................................................................................................... 63
6.3 Imported goods ........................................................................................................ 64
, 7.2.1 Attribution rules – married persons ....................................................................... 69
7.2.2 Attribution rules – minor children .......................................................................... 71
7.3 Gross income ........................................................................................................... 71
7.4 Allowances and advances – section 8(1) .................................................................... 71
7.4.1 Travel allowance ..................................................................................................... 71
7.4.2 Subsistence allowance ............................................................................................ 73
7.4.3 Other allowances .................................................................................................... 73
7.5 Exemptions .............................................................................................................. 74
7.5 Deductions against income ....................................................................................... 74
7.6 Deductions specific to individuals ............................................................................. 75
7.6.1 Pension, provident and retirement annuity fund contributions – section 11F ...... 75
7.6.2 Donations – section 18A ......................................................................................... 76
7.7 Tax tables ................................................................................................................. 77
7.8 Rebates .................................................................................................................... 77
7.8.1 Normal tax rebates ................................................................................................. 77
7.8.2 Medical scheme fees tax credit – section 6A .......................................................... 78
7.8.3 Additional medical expenses tax credit – section 6B .............................................. 78
7.9 Methods of collection ............................................................................................... 78
8. Fringe benefits ................................................................................................. 78
8.1 Overview ................................................................................................................. 78
8.2 Types of fringe benefits – paragraph 2 of the Seventh Schedule ................................. 79
8.2.1 Acquisition of asset for no or inadequate consideration – paragraph 2(a) ............ 79
8.2.2 Right of use of asset – paragraph 2(b) .................................................................... 81
8.2.3 Right of use of motor vehicle – paragraph 2(b) ...................................................... 81
8.2.4 Meals, refreshments, and meal and refreshment vouchers – paragraph 2(c) ....... 82
8.2.5 Residential accommodation – paragraph 2(d)........................................................ 83
8.2.6 Free or cheap services – paragraph 2(e) of the Seventh Schedule ......................... 84
8.2.7 Low interest loans – paragraph 2(f) ........................................................................ 85
8.2.8 Subsidies – paragraph 2(g) and (gA) ....................................................................... 85
8.2.9 Payment of employee debts or release of obligation to pay debt – paragraph 2(h)85
8.2.10 Contribution to Benefit Fund – paragraph 2(i) ..................................................... 86
8.2.11 Incurral of Medical Services Costs – paragraph 2(j) .............................................. 86
8.2.12 Insurance policy payments – paragraph 2(k) ........................................................ 86
8.2.13 Pension, provident and retirement annuity fund contributions – paragraph 2(l) 87
8.2.14 Benefits granted to Relatives of Employees – paragraph 16 ................................ 87
8.3 VAT on fringe benefits .............................................................................................. 87
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